Renting a Home After Bankruptcy: What You Need to Know

The word “bankruptcy” is possibly the most terrifying term in the financial vocabulary (well, perhaps after “Great Recession”). And one of the biggest reasons for this dread is the fear that trying to rent a home — either a house or apartment — after filing for bankruptcy will be somewhere between a chronic uphill struggle, to an outright impossibility.

However, the truth is that renting a home after bankruptcy is not the crushing ordeal that many people fear. If you’re contemplating a bankruptcy filing, then according to Charles H. Huber, an attorney with more than 30 years of experience filing consumer bankruptcy cases, here are 4 things that you need and deserve to know right now:

Most landlords, property managers and private renters are going to be more interested in your job history and employment status, than they are about a bankruptcy filing. And you’re in even better shape if you work in a field with relatively low unemployment, such as nursing, cyber security, engineering, eldercare and so on.

Don’t let your rental application “speak for you” — because you may not like what it has to say. Instead, have a conversation with a prospective landlord, property manager or private renter, and fill them in on the details of your bankruptcy filing. For example, you may have been overwhelmed by medical debt (which, by the way, has emerged as the top cause of consumer bankruptcy), or you may have endured an acrimonious and drawn-out divorce. Or on the other side of the spectrum, you may have honestly lost control of your spending — which is something that happens to numerous of people each year. Regardless what happened in the past, be honest and forthright in explaining what happened, with an emphasis on how you’ve regained control of your financial life.

Consider boosting your application by providing references (of course, ensure that you get their permission first!). While any reference may be able to help boost your chances of approval, including current or former employers is even better.

Target your rental search for properties that specifically note “no credit check” in the ad. Sometimes, these are located around colleges(but not always). Obviously, your selection will be limited, so it’s wise to use this tip as the back-up plan if none of the above work for you.

The Bottom Line

Filing for bankruptcy is a serious step, and yes, it can also be scary. However, it is by no means the end of your financial story. On the contrary, if you get the advice and support you need, it is the beginning of a fresh new chapter — one where you can start making smarter, safer decisions that keep you in the black, and out of the red.